Shares Slip In Asia on Friday 03/05 05:30
World shares and U.S. futures fell Friday after surging U.S. bond yields
renewed selling pressure on high-flying technology companies.
(AP) -- World shares and U.S. futures fell Friday after surging U.S. bond
yields renewed selling pressure on high-flying technology companies.
European shares opened lower, with the DAX in Germany down 0.8% at
13,938.31. Britain's FTSE shed 0.9% to 6,592.69. The CAC 40 in Paris lost 1% to
5,772.79. The future for the S&P 500 lost 0.2% and the future for the Dow
industrials was down 0.3%.
Investors were disappointed with remarks by Federal Reserve Chair Jerome
Powell on Thursday when he said inflation will likely pick up in the coming
months, though he cautioned that the increase would be temporary and would not
be enough for the Fed to alter low-interest rate policies set to help the
economy recover from the pandemic.
Powell did not indicate the Fed might seek to rein in rising bond yields,
which tend to draw money out of stocks into less risky bonds.
Investors were hoping for "a little more hand holding" from Powell, Stephen
Innes of Axi said in a commentary. "Powell is doing the bare minimum here while
simultaneously hinting at a lift-off level that could be a lot nearer on the
horizon than suspected only a few weeks ago."
That angst has spilled into world markets that have thrived on massive
monetary stimulus from the world's central banks. But most markets in Asia
recovered some of their losses late in the day.
Japan's Nikkei 225 lost 0.2% to 28,864.32, while the Hang Seng in Hong Kong
gave up 0.5% to 29,098.29. South Korea's Kospi shed 0.6% to 3,026.26 while the
S&P/ASX 200 sank 0.7% to 6,710.80.
The Shanghai Composite index was less than 0.1% lower, at 3,501.99 after
Chinese Premier Li Keqiang announced an annual growth target of "over 6%" at
the opening of the annual session of the ceremonial national legislature.
Investors are watching for any changes in policy direction from the National
People's Congress, in particular moves to rein in government spending or
tighten monetary policy that might affect markets.
On Thursday, the S&P 500 fell 1.3% to 3,768.47, its third straight loss. It
briefly dipped into the red for the year and is on track for its third
consecutive weekly loss.
Just four days ago the benchmark notched its biggest gain since June during
a brief pause in the recent, swift rise in bond yields, which in turn pushes up
interest rates on loans for consumers and businesses.
The Dow Jones Industrial Average lost 1.1% to 30,924.14. The Nasdaq
composite dropped 2.1%, to 12,723.47 in a pullback that knocked the tech-heavy
index into the red for the year.
Small-company stocks fell even more. The Russell 2000 index of smaller
companies gave up 2.8%, to 2,146.92.
As the economy reopens this spring and summer, and vaccines are distributed
and the coronavirus retreats, many economists expect a spending boom that will
stretch available supplies of goods and services and likely push up prices,
Powell said Thursday.
Even so, Powell gave no hint that the Fed would take steps to keep
longer-term interest rates in check, such as by shifting some of its $80
billion in monthly Treasury purchases to longer-term securities.
"We think our current policy stance is appropriate," he said.
The yield on the 10-year Treasury note jumped to 1.54% during Powell's
remarks, from 1.47% just before, a significant move. At the beginning of the
year the yield was trading at 0.93%. Early Friday it was at 1.55%.
Investors tend to reassess their holdings when yields rise quickly.
Technology stocks are most vulnerable after having soared during the pandemic,
making them look pricier than the rest of the market.
In energy trading, the price of U.S. crude oil rose 91 cents to $64.74 per
barrel in electronic trading on the New York Mercantile Exchange. It jumped
4.2% on Thursday after OPEC members agreed to leave most of their existing oil
production cuts in place. Brent crude, the international standard, surged $1.09
to $67.83 per barrel.
The Senate is moving forward with President Joe Biden's stimulus bill, with
most of the negotiations now happening between the more moderate Democrats in
the Senate and the White House.
Investors are awaiting the February jobs report on Friday. Economists
surveyed by FactSet expect employers created 225,000 jobs last month. The
report also includes numbers for how much wages are rising across the economy,
a key component of inflation.
The U.S. dollar surged to 108.45 Japanese yen, its highest level in nine
months, from 107.97 yen late Thursday. The euro fell to $1.1932 from $1.1969.